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March 9, 2006
Notes for Remarks by the Honourable James M. Flaherty, P.C., MP Minister of Finance to the Whitby Chamber of Commerce
Whitby, Ontario
Check against delivery
Good afternoon.
It’s nice to be home among good friends, close neighbours and long-time supporters. I couldn’t think of a better place to deliver my maiden speech as federal Minister of Finance. Whitby has been a pillar of support for the past 10 years, and I appreciate the trust you have placed in me. I’m proud to say this is home for me and my family.
Throughout my political career, both provincially and now federally, I have been able to count on the people in this room and in this riding for insight, information and advice on key issues affecting our families and businesses.
In the coming weeks, in my primary role as your MP and as Minister of Finance, I will again turn to many of you as I begin work on the federal budget and deal with the many other challenges I will face as the person responsible for the nation’s finances—nearly $200 billion a year overall.
Five years ago, I was responsible for a $64-billion budget as Ontario Minister of Finance.
The numbers may be bigger and the issues wider in scope, but the lessons I learned as provincial Finance Minister will continue to guide me as I carry out my federal duties.
New Government
In my 2001 Ontario budget speech I referred to hard-working families that make responsible decisions about their own budgets, every single day. They expect governments to behave the same way—to be prudent, to be frugal, to be accountable and to make the tough but necessary choices.
That’s just as true today. In fact, Prime Minister Stephen Harper is taking government accountability to a new level. The trust that Canadians have placed in the Conservative government will not be taken for granted. The Harper government is charting a new course:
- replacing the culture of entitlement;
- putting Canada’s interests ahead of the interests of a privileged few; and
- focusing on your priorities.
Canadians sent us to Ottawa to get things done and that’s exactly what we intend to do. We are rolling up our sleeves and taking a workmanlike approach to government.
I can assure you we are committed, focused and frugal. We are starting with the five specific areas we outlined in our election platform, keeping our word to the people of Canada.
Five Priorities
Those five areas are the following:
- cleaning up government by passing the Federal Accountability Act;
- reducing the tax burden of Canadians, starting with a one per cent cut to the GST;
- making our streets and communities safer by cracking down on crime and introducing mandatory minimum sentences;
- supporting families by providing a $1,200 per year Choice in Child Care Allowance for each child under six and providing tax credits to employers who cover the full cost of creating child care spaces; and
- working with the provinces to improve health care by establishing a Patient Wait Times Guarantee.
While doing my part to implement these priorities, I will draw upon the other lessons learned throughout my career, whether it was setting up a law firm, drafting a budget, or working towards more secure neighbourhoods as co-chair of Stephen Harper’s Task Force on Safe Streets and Healthy Communities.
Balanced Budget and Fiscal Prudence
For starters, I strongly believe that balanced budgets and paying off debt are essential to our nation’s success. They are not something to be bargained away during budget deliberations.
That’s why, when I was Ontario’s Finance Minister, I made the largest single payment in history to reduce the public debt in Ontario: $3.1 billion.
Deficit financing is not sustainable with your own finances; why should government be any different?
I will also keep in mind whose money I’m responsible for—yours. That’s why I’ll strive to keep a lid on federal spending, which last fiscal year went up by some 15 per cent.
When I was in the provincial Conservative party we used to say that the problem wasn’t that revenues were too low, but that spending was too high. We need to ensure that when we spend taxpayers’ dollars, we get results, and you get good value.
The Prime Minister believes this as well. He has clearly indicated that, over the past five years, growth in spending has been expanding at an unsustainable rate.
That’s why our government fully intends to limit future growth in spending to more reasonable levels. In fact, our government has made a commitment to limit future growth on federal grant and contribution programs and within federal departments and agencies to the rate of inflation plus population growth.
I am currently working with Finance Department and Treasury Board officials to ensure taxpayer dollars will only be spent on programs that are effective and efficient—on programs that work for Canadians.
I can assure you the Harper government is leading by example.
We saw one of those examples on February 6 when our government was sworn in. Our incoming cabinet is leaner than previous ones. It’s a prudent decision that will save all of us a significant amount of money.
Being fiscally responsible is in everyone’s best interest. It provides us with the flexibility to ensure you keep more of your own money to invest it in the things that matter to you.
Tax Relief
Delivering on our GST commitment is a vital part of that. Our government is committed to reducing the GST by one per cent immediately, putting money back into the pockets of hard-working Canadians.
It’s a tax cut for everyone. A tax cut you see every time you buy something.
For example, the average price of a new home in Whitby is $318,000, translating into a savings of thousands for a young family. Or if you purchase a new Oshawa-built Monte Carlo, the savings could be in the hundreds. Clearly, the impact on the Canadian economy will be significant.
This tax initiative is one of Prime Minister Harper’s five main priorities, and I can assure you it will be front and centre when Parliament resumes this spring.
Of course, it’s not the only tax relief taxpayers will see. We also want to lighten the tax burden for business people.
After all, it’s your drive and your investment that creates well-paying jobs for our neighbours here in Whitby and beyond. The members of this Chamber of Commerce generate the economic growth that benefits our community, our province and our country.
That’s why the Harper government is committed to business tax relief promised, but not delivered, by the previous government.
During the election we campaigned on reducing corporate taxes and following through on eliminating the federal capital tax. Rewarding Canadians, in other words, who reinvest their money and create jobs.
Rest assured we will move forward on this as soon as we can.
We will also make sure we support the lifeblood of Canada’s economy: small business owners. We all know it’s the small dry cleaners, the corner framing shop, or the neighbourhood grocer who create the vast majority of jobs across the country.
As we move forward, I will rely on the government’s Opportunity Plan for Small Business, a package that would lower small business taxes and create a tax incentive to hire new apprentices in industries that so urgently need them.
Canada currently has a shortage of 20,000 skilled tradespeople, an unacceptable situation that needs to be addressed. Our government will offer a tax credit of 10 per cent of an apprentice’s wages for two years to a maximum of $2,000.
Our plan would raise the threshold at which businesses have to pay the general corporate tax rate, and cut the small business rate itself within five years.
Fiscal Imbalance
Another commitment made during the election was that our government would finally address the fiscal imbalance between the federal and provincial governments. Having been a minister at Queen’s Park, I understand how this issue is seen from a provincial government perspective.
Our government has begun discussions with the provinces and territories to try to find a long-term solution to the fiscal imbalance issue. It will not be a simple exercise.
The issue didn’t emerge overnight, and will not be resolved overnight. However, the goal will be a comprehensive arrangement that will permanently address the fiscal imbalance.
And you can be sure it will be done by a federal government that will be open and completely transparent in the process.
You may be surprised to learn that running a deficit is the exception, not the rule here in Canada.
Today there are only two provinces in a deficit situation: Ontario and Prince Edward Island. The majority of provinces have balanced their books, or are now running surpluses.
I’ll be interested to see what progress Ontario is making on the fiscal front when it delivers its budget later this month.
I will be also be interested in reading the federal report on equalization which will be released in the near future.
Before I move on, I just want to touch on the issue of equalization. I believe the current equalization process is a mess due to ad hoc, one-off deals by the previous government.
It does not reflect the values that the majority of people hold in this country. We are Canadians first, and we support each other by sharing the wealth.
According to a recent survey by the Centre for Research and Information on Canada, nearly three out of four Canadians agree that by acting together they can have at least some impact in making our communities better places to live. This need to work together as Canadians is vital as we move forward.
The challenges our country faces—and that you face—go beyond relations between various orders of government and complicated transfer calculations.
Infrastructure
As we all know, traffic congestion is strangling our roadways, our basic infrastructure is aging and our border crossings are inadequate. As a former Ontario cabinet minister and the federal minister responsible for the GTA, I know these infrastructure challenges far too well.
These infrastructure challenges are more than a daily inconvenience; they pose real risks to the future prosperity of our communities, and to the entire country. In fact, it’s estimated that traffic congestion in the GTA alone is costing the Canadian economy billions in lost productivity.
We made it clear during the campaign that our country’s future prosperity will, to a significant extent, depend on the strength, health and security of our cities and communities.
We know the federal government has a useful and supportive role to play in securing the future of our cities and communities, including large urban centres like the GTA.
We also know what our role is, and that the best way to manage it is in cooperation with provincial and municipal authorities.
As I stressed two weeks ago in a Toronto symposium that included all three levels of government, we offered Canadians several proposals during the election that will help build a better future for our urban centres.
We will act on each and every one of them, step by step, as resources permit. They include:
- maintaining existing infrastructure agreements between the federal government, the provinces and municipalities;
- making the New Deal better, by allowing cities and communities with more than 500,000 people to use gas tax transfer dollars for building and repairing roads and bridges to improve road safety and reduce traffic congestion;
- negotiating a new infrastructure agreement with the provinces to provide a stable and permanent Highways and Border Infrastructure Fund;
- working to increase the stock of affordable housing in our towns and cities; and
- making our communities safer by, among other things, providing stiffer sentences for crimes involving firearms and reallocating funds from the gun registry program to support the hiring of more front-line police officers.
The end result be will Canadian communities that offer a higher quality of life, Canadian communities that enable businesses to flourish, and families to feel secure. These items will also be a key part of the deliberations as we begin this budget process and set the stage for future budgets.
Making Choices
Let me caution everyone here today. As Finance Minister, I know that choices have to be made.
We can’t do everything at once; we simply don’t have the resources. After meeting with the Premiers recently, Prime Minister Harper made it clear that the provincial wish list was just too expensive. It wasn’t sustainable.
Our government believes we must set priorities that are reasonable and affordable, and stick by them. Our approach will be frugal, focused and fiscally responsible.
In January, Canadians gave us a mandate to lead change, and you can’t have responsible leadership without making prudent, responsible choices. We cannot afford to jeopardize our strong economy with reckless spending.
And I can assure you we won’t. Our plan is both prudent and affordable.
Canada now has a record $1-trillion economy and corporate profits that are also near record levels. That cannot be taken for granted—it must be protected, it must be nurtured.
When I met with my G8 counterparts in Russia a few weeks ago, it quickly became apparent that Canada’s balanced budget approach, the fact that we are currently experiencing strong economic growth and that we are going to make meaningful tax cuts, is increasingly seen as an international success story.
Others are reaching the same conclusions about our country’s potential.
Standard & Poor’s says Canada’s economic growth will be better than most of its peers thanks to lower taxes, renewed spending on education, and a diversified, export-oriented, highly developed economy.
And in a report last week in The Globe and Mail called "Bypass Switzerland, go straight to Canada," the deputy chief economist of BMO Nesbitt Burns, Douglas Porter, concluded that Canada now boasts "some of the soundest economic fundamentals in the world," including a current account surplus that is quickly becoming the envy of most nations.
These are encouraging words. But if we are to maintain our competitive advantage and build on this success, we will have to make some tough but necessary decisions.
I can assure you Prime Minister Stephen Harper and our government are up to the task.
Conclusion
Let me conclude with one final thought. Certainly the big picture is important. Canada is a major player on the world stage.
But what drives our economy is people like you here in Whitby. It’s people like you who get up day after day to go to work, to operate your own business, to employ people, to deliver goods and services and yes, to pay a lot of taxes.
For those reasons, you have the right to expect that those you elect will remember who sent them and why.
As I have done for the past 10 years, I will be your voice in caucus and cabinet, I will represent your concerns, and I will never forget the good people of Whitby–Oshawa.
Once again, I look forward to working with you, and with all Canadians, to deliver the positive change that will benefit us all.
Thank you very much.
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| Last Updated: 2006-03-10 |
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